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Forget bricked iPhones. For many iPhone users, the biggest disappointment with last week’s iPhone software update wasn’t that it rendered unlocked phones inoperable but that it disabled third-party apps that have sprung up for Apple’s device. And that could lead to ongoing grief for the company, analysts say.

It’s that last development that figures to cause Apple the biggest headache long after the initial clamor over bricked iPhones fades away.

“There is some serious frustration from people that did not unlock the phone but did use third-party applications,” said Tim Bajarin, president of high-tech consulting firm Creative Strategies. “The fact those apps have been altered has caused a big outcry. Apple is taking a significant hit because enough of people found those applications useful.”

Apple has balked at providing developers full access to the iPhone, instead suggesting that they use programing tools like Ajax to
build Web-based applications for the iPhone. That hasn’t prevented some software makers from figuring out ways to build programs for the iPhone—and it certainly hasn’t stopped iPhone owners from sampling those programs.

Application installers like AppTap have been a favorite among iPhone users since their release. AppTap “jailbreaks” the iPhone, which allows files to be written to it. Many third-party applications, from BSD Subsystems to games and utilities have been released by developers for free, allowing users to install and uninstall applications at will. Because users found those applications useful, losing access to those programs after iPhone 1.1.1 was installed generated a noticeable amount of frustration.

So why release an update that disabled third-party apps? Analysts say Apple probably didn’t do so intentionally—something that
Apple itself insists. But from the company’s standpoint, there are some reasons why ensuring support for third-party programs is not a priority right now—namely, security and stability for the iPhone.

“Apple wants to provide support for the phone, but you have to have a stable, consistent environment to do that,” said Ross Rubin, director of analysis at market research firm NPD Group. “Third-party applications make that more difficult, even though they might appeal to the public.”

Last week’s software update could also be aimed at advancing the iPhone’s operating system to prepare it for future capabilities. Bajarin notes that since the third-party apps were written on the original codebase, they wouldn’t be able to work with such an update.

Whatever the reason that third-party apps wound up disabled with the 1.1.1 update, it’s an issue that doesn’t figure to fade away.

“Apple needs to be aggressive in a third-party application program that focuses on OS X, not the Web browser,” Bajarin said. “The question for Apple is how quickly will they give us a native platform.”

Analysts were less sympathetic to the outcry of users who wound up with inoperable iPhones after using third-party hacks to unlock their devices. Unlocking a phone is a process that hackers use to break the link between the device and the wireless service provider, in this case AT&T. Once a phone is unlocked it can be used with any provider that supports the same network. This is what allows people to use the iPhone with networks like T-Mobile.

“Apple had two motivations for releasing the [1.1.1] update,” Rubin said. “The first is the iTunes Wi-Fi Store, which is another revenue source, and the other is to enforce the exclusivity of the contract with AT&T. That’s a big part of the value AT&T gets from partnering with Apple.”

Tim Bajarin, agrees: “When people buy the iPhone they know what the terms are—Apple has been very upfront about that. As a result, Apple can’t control the impact of what happens because of a hack.”

This story, "Analysis: Application blocking diminishes iPhone" was originally published by
PCWorld.

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